How to stay the course in this sea of inflation?
How to stay the course in this sea of inflation? Inflation reached an enormous figure of 7.5% per year. There is no doubt that this trend has an impact on small business activity and many retailers feel overwhelmed not knowing how to act in such a hostile environment to stay afloat.
It is no secret that rising inflation means that the prices of goods and services have risen across the board. A fact that grips the activity of most businesses. On the one hand, it is difficult for them to acquire raw material -at a good price- to produce their products or services. On the other hand, customers, who are also struggling to survive inflation, are more selective when it comes to spending.
How can a business navigate the sea of inflation?
The great dilemma of businesses today is whether or not they should pass on the high prices of raw materials to their customers. The answer is that if they want to survive, they have to. Otherwise, they will incur losses. Of course, there are businesses that taking this measure would scare customers away from the competition. These have no choice but to diversify the offer. That is, look for new products or services that absorb the losses of the usual products.
The Achilles’ heel of business is the prices that raw materials have reached. In order to survive, it is key to focus on expenses and reduce all those that are not truly essential. Business owners should review the production costs of each product to determine where they can cut back. Perhaps negotiating local rents, analyzing if you have excess labor, changing expensive raw materials, or making better use of new technologies.
A good strategy is to buy more of the essential raw material to avoid tomorrow’s prices.
There is no doubt that businesses need to be more creative than ever to attract customers. Some experts point out that attracting a new customer is 5 times more expensive than retaining existing customers. With that maxim in mind, you may want to focus your advertising on retaining your regular customers. However, if sales are going very poorly, it may mean that the time has come to look for a new segment of the market, less affected by inflation.
“Having a good sales hook” could also work, that is, creating different discounts that attract customers and once inside, encourage them to consume other products.
Do you remember that line of credit that you never wanted, it’s time to talk to your bank and have it at hand. Perhaps, you have the opportunity to make a quick and bulky purchase, which means good savings. But, when it comes to buying, you can’t run to the bank to get a loan approved. How to stay the course in this sea of inflation?
Don’t forget to keep your business insurance up to date. Speaking of savings, at Univista Insurance you will find the cheapest commercial insurance on the market.